Capital Equipment News

Following the finalisation of the Konecranes’ worldwide acquisition of Terex MHPS, which in effect is Demag Cranes, Hoists, Material Handling and Ports Solutions, the two global crane brands will be sharing their considerable combined knowledge and technology, becoming a substantial force in the lifting business in sub-Saharan Africa.

Krohne and Terex join forcesThe acquisition will improve Konecranes’ position as a focused global leader in the industrial lifting and port solutions market. Konecranes will achieve substantial growth opportunities in the service business, which is already a stronghold of the company in southern Africa. Konecranes has a long history of conducting routine service inspections, repairs and refurbishment of Demag cranes.

In South Africa the merger also extends to the Wolff Cranes brand which was acquired by Demag in the late 1980’s. In terms of the port material segment, it includes handling technology with a broad range of manual, semi-automated solutions under the Gottwald and Noell brands.

“We are extremely proud to combine forces with Demag. We want to provide a home for Demag and Port Solutions, from which these businesses can grow and become stronger as part of our joint organisation. The acquisition makes it possible for us to realise a long list of synergies between our two companies. We will be one technology company, ready to create the next generation of lifting,” says Knut Stewen, Konecranes’ managing director Southern African Countries and vice president head of Region Africa.

This was echoed by John Haarhoff, managing director of Demag MHPS. “We strongly believe that in the long term, the sharing of combined technology will allow the two businesses to develop solutions that will further improve the productivity and safety of the Demag, Wolff and Konecranes. We aim together to excel at providing the services our customers require”.

In a first joint team effort, the Demag/Konecranes team signed a three-year service and maintenance contract for Arcellor Mittal Saldanha Steel Mill which will require a supervisor and four technical teams on site.

“Konecranes is well prepared to deliver expected synergies based on the extensive integration planning work carried out jointly with Demag over recent months. Of the total of €140 million per annum synergies targeted within three years, €35 million is expected to be implemented within 12 months from January 1, 2017, from which date the MHPS acquisition is deemed effective from a financial point of view. Overall, synergies will come from procurement, operations and SG&A. One-time implementation expenses are expected to be €130 million, with €60 million of capex expected. In addition, dynamic synergies related to new opportunities in global service operations are expected to lead to significant earnings growth,” explains Miikka Kinnunen, vice president, Investor Relations.

The consideration for the Demag business is $595 million and €200 million in cash and 19 600 000 new class B shares. Pursuant to the Stock and Asset Purchase Agreement dated May 16, 2016 (the “SAPA”), the final cash consideration is subject to post-closing adjustments for cash, debt, working capital and the closing of the sale of the STAHL CraneSystems business. The final number of class B shares may be subject to certain adjustments in accordance with the SAPA.

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